Asia Poly Films Industries

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.42.52 Crs. of Asia Poly Films Industries

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Term Loan - Sanctioned Cash Credit - Sanctioned Term Loan - Sanctioned	13.00 07.84 06.00 12.68	Long Term	BWR BB - (Stable)
Sub Total	39.52
Non-Fund Based
Bank Guarantee - Sanctioned	03.00	Short Term	BWR A4
Sub Total	03.00
Grand Total	42.52	(Rupees Forty Two Crores and Fifty Two lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR has essentially relied on Audited financials upto FY19, projected financials for FY20 and FY21, publicly available information and information & clarifications provided by management.

The rating assignment factors in average financial risk profile of the Company in FY19. The rating has positively factored in promoters experience in the manufacturing of BOPP sheets. However the rating is constrained by working capital intensive operation and volatility in raw material prices.

BWR believes that Asia Poly Films Industries business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. 

KEY RATING DRIVERS

Credit Risk:

• Below average financial risk profile: APFI reported loss of Rs. 13.09 Crs and Rs. 18.83 Crs. in FY19 and FY18 respectively which has resulted in erosion of net worth and resulted in deterioration of capital structure. The adjusted gearing for FY19 was 9.08 times with adjusted net worth of Rs. 6.14 Crs. Low debt protection metrics with DSCR and ISCR of 0.13 times and 0.07 times in FY19.

• Susceptibility to volatile raw material prices: The primary raw material used in the manufacturing process is Polypropylene homopolymer (PPHP), which is crude oil derivative whose prices are subject to volatile in line with crude oil price. 

• Working capital intensive operation: APFI is engaged in working capital intensive operation as evident from low days payable of 4 days against days receivable of 21 days and inventory days of 21 days.

Credit Strength:

• Experienced partners: All the 13 partners of APFI are having extensive experience in their respective fields. The managing partners of the firm, Mr.Dipeshbhai Patel and Mr. Kiritbhai Fultariya, looks after the day to day operations of the firm and are having extensive experience in the packing industry.

• Modest scale of operation: Total operating income(TOI) for FY19 increased by 27% to Rs 157.67 Crs. from Rs 123.95 Crs. in FY18. However the company made a loss of Rs 13.09 Crs. in FY19. As per provisional financial statement of FY20 the company made a profit of Rs 4.80 Crs. with TOI of Rs 158 Crs. till Dec19.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive:

• Sustainable and substantial improvement in the revenue and profitability.
• Reduction in debt level or infusion of additional capital.

Negative:

• Decline in scale of operations and profitability.
• Deterioration of financial risk profile.

LIQUIDITY POSITION

Liquidity Position: Stretched    

Liquidity position of APFI is stretched as evident from net loss which led to cash outflow in FY19. With its business expected to generate profit in FY20 the liquidity position is expected to improve going forward. The current ratio was 0.84 times in FY19.

PROFILE

The Business Entity was formed in 2015 at Morbi, Asia Poly Films Industries is engaged in manufacturing of BOPP films from 12 microns to 50 microns used mainly in packing and tape industry. The manufacturing plant is located at Morbi, Gujarat, with an installed capacity of 25,000 MT per annum. Mr. Dipeshbhai Patel and Mr. Kiritbhai Fultariya are the Managing Partners and take care of day to day operations of the firm. APFI has two group entities ‘M/s Tirthak Paper Mill Pvt. Ltd. (TPMPL)’ and ‘M/s Wallstone Ceramic (WC), incorporated in the year 2006 and 2014 respectively by Mr. Kiritbhai Fultariya. TPMPL is engaged in the manufacturing of paper products and WC is engaged in the manufacturing of wall tiles on job work basis.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	170.54	140.83
EBITDA	Rs.Crs.	0.47	-2.70
PAT	Rs.Crs.	-13.09	-18.83
Tangible Net Worth	Rs.Crs.	-7.79	4.61
Total Debt/Tangible Net Worth	Times	-8.95	15.38
Current Ratio	Times	0.84	1.04

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned Term Loan - Sanctioned Cash Credit - Sanctioned Term Loan - Sanctioned	Long Term	13.00 07.84 06.00 12.68	BWR BB- (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Short Term	03.00	BWR A4	NA	NA	NA
Total			42.52	(Rupees Forty Two Crores and Fifty Two lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria :

• General Criteria
• Manufacturing Companies
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Siddharth Shah Lead Analyst siddharth.s@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Dileep Narayan Singh dileep.s@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	13.00	_	13.00
2	Term Loan - Sanctioned	7.84	_	7.84
3	Cash Credit - Sanctioned	6.00	_	6.00
4	Term Loan - Sanctioned	12.68	_	12.68
5	Bank Guarantee - Sanctioned	_	3.00	3.00
Total				42.52
TOTAL (Rupees Forty Two Crores and Fifty Two lakhs Only)